Exam 15: Aggregate Demand and Aggregate Supply

Suppose an economy is in recession.If the government does nothing, what ensures that the economy still eventually gets back to the natural rate of output? Create a chart to depict an economy in recession.

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Question 1

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The graph below depicts an economy in a recession.The short run aggregate supply curve is AS₁ and the economy is in equilibrium at point A, which is to the left of the long run aggregate supply curve.If policymakers take no action, the economy will return to the long run aggregate supply curve over time, since the actual price level will be below the price level that people expected.Individuals will eventually correct their expectations about the price level.As they do so, prices and wages will adjust accordingly, shifting the aggregate supply curve to the right to AS₂.The economy's new equilibrium is at point B.The rightward shift in aggregate supply eventually causes output to rise back to the natural rate.

Suppose the economy is initially in long run equilibrium.Then suppose there is an increase in military spending due to rising international tensions.According to the model of aggregate demand and aggregate supply, what happens to prices and output in the long run?

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Question 2

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The classical dichotomy refers to the separation of

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Question 3

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Which of the following is most commonly used to monitor short run changes in economic activity?

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Question 4

Stagflation occurs when the economy experiences

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Question 5

Suppose the economy is initially in long run equilibrium.Then suppose there is a drought that destroys much of the wheat crop.If policymakers allow the economy to adjust to long run equilibrium on its own, according to the model of aggregate demand and aggregate supply, what happens to prices and output in the long run?

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Question 6

Movements along the aggregate supply curve are caused by changes in

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Question 7

If the classical dichotomy and monetary neutrality hold in the long run, then the long run aggregate supply curve should be vertical.

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Question 8

According to the model of aggregate supply and aggregate demand, in the long run, an increase in the money supply should cause prices to

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Question 9

Recession in SA will cause

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Question 10

Which of the following would not cause a shift in the long run aggregate supply curve? An increase in

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Question 11

Any factor that increases resource availability causes

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Question 12

Make a list of things that would shift the long run aggregate supply curve to the right.

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Question 13

Which of the following will reduce the price level and reduce real output in the short run?

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Question 14

There are three factors that help explain the downward slope of the aggregate demand curve.Discuss the importance of these factors.

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Question 15

According to classical macroeconomic theory, changes in the money supply affect

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Question 16

The misperceptions theory explains why the long run aggregate supply curve is downward sloping.

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Question 17

Which of the following will reduce the price level and raise real output?

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Question 18

In the model of aggregate demand and aggregate supply, the initial impact of an increase in consumer optimism is to shift the

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Question 19

Shifts in aggregate demand affect the price level in

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Question 20

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Suppose an economy is in recession.If the government does nothing, what ensures that the economy still eventually gets back to the natural rate of output? Create a chart to depict an economy in recession.

Suppose the economy is initially in long run equilibrium.Then suppose there is an increase in military spending due to rising international tensions.According to the model of aggregate demand and aggregate supply, what happens to prices and output in the long run?

The classical dichotomy refers to the separation of

Which of the following is most commonly used to monitor short run changes in economic activity?

Stagflation occurs when the economy experiences

Movements along the aggregate supply curve are caused by changes in

If the classical dichotomy and monetary neutrality hold in the long run, then the long run aggregate supply curve should be vertical.

According to the model of aggregate supply and aggregate demand, in the long run, an increase in the money supply should cause prices to

Recession in SA will cause

Which of the following would not cause a shift in the long run aggregate supply curve? An increase in

Any factor that increases resource availability causes

Make a list of things that would shift the long run aggregate supply curve to the right.

Which of the following will reduce the price level and reduce real output in the short run?

There are three factors that help explain the downward slope of the aggregate demand curve.Discuss the importance of these factors.

According to classical macroeconomic theory, changes in the money supply affect

The misperceptions theory explains why the long run aggregate supply curve is downward sloping.

Which of the following will reduce the price level and raise real output?

In the model of aggregate demand and aggregate supply, the initial impact of an increase in consumer optimism is to shift the

Shifts in aggregate demand affect the price level in

What Is Economics

Thinking Like an Economist

Measuring a Nations Well-Being

Measuring the Cost of Living

Production and Growth

Unemployment

Saving, Investment and the Financial System

The Basic Tools of Finance

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Business Cycles

Keynesian Economics and the Is-Lm Analysis

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short Run Trade-Off Between Inflation and Unemployment

Supply Side Policies

The Financial Crisis and Sovereign Debt

Common Currency Areas and European Monetary Union

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